Kotak Mahindra Bank has launched the ‘Smart Choice’ gold loan, under which it is offering same-day loan disbursements at a fixed monthly interest rate starting from 0.88 per cent with no processing fees, foreclosure options and minimal documentation for disbursements of up to ₹25 lakh.

The product is based on consumer research and the need for the product felt by existing borrowers of the bank, said Manish Kothari, President and Head - Commercial Banking, adding that the bank is seeing strong demand for gold loans from the current customer base.

Kothari said that the bank’s offering is much less expensive compared to similar loan products offered by peers. In addition, rates are also better than they were for the industry about two years back. Further, this plan also offers flexible repayment options such as monthly, quarterly or half-yearly interest payments.

According to CIBIL data, gold advances stood at ₹7.15-lakh crore as of December 2023, growing at a CAGR of 19 per cent for the last three years. 

“An increasing number of individuals are considering gold loans as a cost-effective option comparable to other credit products, indicating a shifting trend in consumer financial behaviour,” said Shripad Jadhav, President – Retail Agriculture and Gold Loans.


Asked on whether rising competition from banks and NBFCs in the gold loan segment could constrain growth, Kothari said the market is huge and that the bank is targetting both existing and new customers, with a focus on semi-urban and rural areas. The offers loans of a minimum ticket size of ₹20,000 through 1,348 branches located in 301 cities across the country, and expects to grow faster than the industry in FY25 given its smaller base.

Given the low credit risk in the loan segment, it is a generally safe growth segment for the bank and delinquencies continue to be negligible, Kothari said, adding that the few delinquencies that have been seen are largely from leveraged borrowers that may have defaulted on other loan categories as well.